Obama violating law on TARP oversight?

posted at 8:55 am on March 20, 2009 by Ed Morrissey

Has the Obama administration broken the law on TARP? It appears that it has violated a major law on oversight — by failing to provide any.

When Congress first created the TARP program, it insisted on oversight over the actions of the Treasury Secretary, rejecting the Bush proposal to allow Henry Paulson unlimited and unsupervised authority over $700 billion of taxpayer money. They created the Financial Stability Oversight Board (FINSOB), comprised of the Treasury Secretary, the Chairman of the Federal Reserve Board, the Chairman of the Securities and Exchange Commission, the Secretary of Housing and Urban Development, and the Director of the Federal Housing Finance Agency. The law requires the board to meet on a monthly basis, but during the Bush administration it met at least every other week to review actions in relation to the bailouts.

Interim Assistant Secretary for Financial Stability Neel Kashkari testified before the House Financial Services Committee on December 10th about the oversight (emphases mine):

In addition to the normal oversight provided by Congressional committees of jurisdiction, the Congress established four important avenues of oversight: one, the Financial Stability Oversight Board; two, the Special Inspector General; three, the Government Accountability Office; and four, the Congressional Oversight Panel. I will review Treasury’s interaction with each body in detail.

First, we moved immediately to establish the Financial Stability Oversight Board, which, by law, includes: the Secretary of the Treasury, the Chairman of the Federal Reserve Board, the Chairman of the Securities and Exchange Commission, the Secretary of Housing and Urban Development, and the Director of the Federal Housing Finance Agency.

The law required the first board meeting to take place within fourteen days. We moved very quickly, and the Oversight Board met within four days. At that initial meeting, the members of the Board selected Chairman Bernanke to be Chairman of the Oversight Board. The law requires the Board to meet once a month, but it has already met four times in the just two months since the law was signed, with numerous staff calls between meetings, and expects to meet again this week.

We have also posted the bylaws and minutes of the Board meetings on Treasury’s website. In addition, the Oversight Board has interacted with other oversight bodies, such as the GAO and the Congressional Oversight Panel.

The listing of board minutes can be found on the Treasury’s website. However, according to this list, the last FINSOB meeting took place on January 15th of this year — five days before Barack Obama’s inauguration. The meeting was conducted via conference call. It was the last meeting in which former Treasury Secretary Henry Paulson participated.

According to this, current Treasury Secretary Tim Geithner has yet to participate in the oversight function Congress mandated by law. Despite receiving hundreds of billions of dollars in additional TARP funds, it appears that the current administration has performed zero oversight over it. Not only does that beg the question as to what Tim Geithner is actually doing as Treasury Secretary, it also makes it appear that Congress has no desire to protect the money it’s shoveling into the West Wing of the White House.

I have contacted the White House for any comment they may have on this matter, and I will update readers when they respond (via HA reader Morgen).

Treasury officials and Members then reviewed and discussed the restrictions that would apply to AIG under the terms of the investment, including restrictions on corporate expenses, restrictions on lobbying, and limitations on executive compensation that would apply under EESA, as well as the additional limitations that would apply to senior executive compensation and bonuses. In addition, AIG would be required to comply with certain corporate governance requirements, including the formation of a risk management committee under the company’s Board of Directors.

So Treasury knew about the bonuses in November 2008. Maybe if they’d held the FINSOB meetings, Obama wouldn’t have been gobsmacked by them.

Talk about living in BizzaroWorld. Just when you think BarryO can’t make any stupider rookie mistakes, he goes and proves he can. Is ANYONE paying attention to the floundering, is there NO ONE on duty??

Ed, you keep this up, they’ll just quit answering the phones at the White House when your number comes up on the caller ID.

Incidentally, Drudge is running a headline that Obama’s bracket is a bust…11/16 for a grand total of 69% accurate thus far. As opposed to his administration, which is O-fer the year thus far. Obama should nationalize ESPN and appoint himself Czar of Bracketology, just so he can get an answer right occasionally.

THEY (OUR polititians) KNEW – if they took the time to read it…………..The term sheet for AIG in November mentions the bonuses – it’s 6 PAGES LONG – c’mon no one can convince me that they didn’t know.

http://www.treas.gov/press/releases/reports/111008aigtermsheet.pdf
EXECUTIVE COMPENSATION:
SECTION 2. The annual bonus pools payable to Senior Partners
in respect of each of 2008 and 2009 shall not exceed the
average of the annual bonus pools paid to Senior Partners for
2006 and 2007 (in each case exclusive of AIG’s historic quarterly
bonus program, the amount of which will not increase for any
participant, and subject to appropriate adjustment for new hires
and departures).

This administration just writes checks to those that don’t pay taxes with funds they will get from taxpayers or worse (worthless printed money). If there was oversight those companies that owed millions in back taxes would not have received any, is this a cost savings? I suspect the money will disappear regardless of what is done. It sure won’t go to immigration reform or enforcing immigration law.

Amazing! The O’s got people watching everything but the money. At least, that’s what he’s got everyone thinking. Yeah, uh huh, maybe the money’s going out just as planned. He’s greasing all kinds of skids. Wonder what the line on the Tarheels is?

Scarborough had Chris Hansen on his show this morning, talking about his program coming up this Sunday on MSNBC. Hansen has apparently spent over a year now doing background work and investigation into what created the mortgage crisis that is driving a stake through the heart of our economy.

Listening to his take on the matter, clearly he is pointing the finger of blame directly at the lenders, their greed and their manipulation of the poor little home owner.

So Scarborough asks Hansen, “What were the regulators doing while all of this was going on?”, to which Hansen replied, “They weren’t doing anything” …. and there was no follow-up question.

A good journalist looking for the truth would have asked, “Why not?” But that question was never asked.

You see, the politicians who appointed these regulators to provide oversight to the lending institutions, were receiving hundreds of thousands in campaign contributions from the very same regulators. So the regulators were happy pulling down $100,000 salaries, and the politicians were happy receiving boatloads of money in campaign contributions. That’s how the game is played, so why worry about what’s going on with the lenders when everyone is raking in big fat checks ….. for doing nothing as our economy is taking a nosedive in the abyss.

Yeh, sure. The Lenders were the greedy ones. OK, they were, but the only reason they got away with it was because the politicians and regulators were greedy little bastards too.

I think they slipped something into one of the bills about not needing oversight. I’m sure it’s in there somewhere and if not maybe they used invisible ink to write that part. They don’t need oversight they are running a transparent presidentency.

You’ll notice you won’t find the usual Liberal Trolls in here defending them. They stick to the stupid stuff and leave us to discuss the adult stuff. Would like to see AP comment on this but he won’t. He used to be the one coming up with stuff like this. Now it’s just polls, polls, polls. What a difference a little attention, a hot liberal TV host, & a few years makes.

The problem of course was that social engineers like Obama decided owning your own home was a right rather than a privilege and so they forced through all sorts of loan programs designed to put unqualified people into homes. They pressured the lenders, but once the government decided to insure the loans the lenders went along. A lot of people helped make this happen. But to just talk about regulation is not really true. It was not a lack of regulation, it was a deliberate change in policy.

I think Obama knew about the bonuses. I just don’t think he cared until he realized that it was going to be a problem politically. Then of course he tried to find a way to make it work for him.

The man is opportunistic.

Terrye on March 20, 2009 at 9:42 AM

Well, of course they did! They knew the Tea Parties, and the Rick Santellis were gathering steam and couldn’t just be brushed off, much like Cramer was (yutz!). This was merely an attempt at deflecting that anger from them and the government in general to some nice, deserving, populist target, those eeevvviiiillll Wall Street Fat Cats that are just trying to make us all die.

No, those were rules established under the Clinton administration. Bush for his part did try as far back as 2003 to reign in Fannie Mae and Freddie Mac only to be told by Democrats that he was overstepping his bounds.

But to just talk about regulation is not really true. It was not a lack of regulation, it was a deliberate change in policy.

Terrye on March 20, 2009 at 9:46 AM

I concur. I was only addressing the regulation as it was brought up, yet not pursued in the Hansen segment. The change in policy regarding the less restrictive guidelines put on the lenders was also mandated by politicians, was it not?

Pardonme but why does anyone think this administration should pay ANY ATTENTION TO THE LAW? Let’s see: Presidential proclamation to do stem cell research but the law is that no federal money can be spent there. He is so egotistical that he feels what he says is the law! Attorney General: only when both state law and federal law is violated will we enforce federal law as it pertains to marijuana. There will be no more ICE enforcement of illegal…oops my bad, undocumented workers. We need to see about “comprehensive” boarder enforcement regardless of the laws on the books. Why enforce IRS rules (law) when it comes to taxes and cabinet picks? Why worry about Sen Dodd making amendments to the budget law re: bonus allowance by certain dates, when actually the administration wrote it and then ignored it?

This just scratches the surface on what has already happened in the first 60 days. This guy is so unorganized or at least it seems that way. He is marching toward total destabilization so that he can implement Marshall law and then make his total conversion to a totalitarian system of government. Don’t believe it? Look at the legislation yesterday that singled out a small group of people to tax to death. What is the repercussion? The public just goes along, don’t they? Who is the next group to receive that same treatment? Obama is evil and we better wake up to it now!

Why does no one re run the tape of Obama singing the absolute praises of CEO Liddy? Did any one else see that or was I dreaming it. Now he says he is appalled but don’t you believe it; Liddy and AIG both were HUGE contributors weren’t they?

You forgot all the Fannie Mae and Freddie Mac Foundation money that went to various districts. We still don’t have a complete accounting of all that, by the way.

DrSteve on March 20, 2009 at 10:37 AM

Fannie Mae is still throwing money around, just not through a foundation anymore. The former CEO of the foundation is back on payroll at Fannie and tossing out millions for anything that relates to “homeownership preservation.” They just gave Queen Latifah a million dollars to do a half-hour video on avoiding foreclosure scams.

seriously, if my taxes increase to pay for this tarp, I may sue congress and President TelePrompter for not attending the required board meeting. In the meantime, I will email this article to my contacts list!